Real Estate Blog

Whenever I can type the words "demand is up in all sectors," it's a happy day for me, and for anyone interested in real estate investing. The numbers that have been coming in all summer on prices, rents, and occupancy rates are as good -- better than what we were looking at back in 2007 before the recession hit. In fact, Capitol Market Research is putting the occupancy rate at 97.8 percent, which is a record. Investors are coming into Austin from all over the country.

But before we completely jump on the optimism band wagon, I do want to pause just a minute and talk about due diligence. Only a small number of multi-family units are up for sale right now, and it's more important than ever to know exactly what you're buying. I'm seeing investors who have been carrying properties that are in pretty bad shape seizing the opportunity to ask for top dollar. They're making the most of high demand and low availability. If you're not careful, you could wind up with a property that just isn't worth what you paid for it, and worse yet, that will offer no good return on your investment.

Also, try to stay out of the feeding frenzy. Multi-offer situations are turning into the norm right now, and it's easy to fall prey to the auction fever. You raise your hand to bid, you get hooked on the excitement of the moment, and before you know it, you've bought something for a great deal more than you had in mind. Development will catch up, which will be good for traditional residential investors. Residential builders are getting back in the game. Just slow down and carefully evaluate anything you're interested in buying, and watch what's coming online in terms of new construction.

The real gold mine is going to be in student housing. UT had 1,200 students on the waiting list for housing, which puts students and their families in the position of considering alternative options. Students are willing to look farther beyond the traditional confines of students apartments, like Far West Boulevard and Riverside Drive. Investment properties that can cater to that niche market are guaranteed an evergreen pool of existing and future tenants. How evergreen? Well, the Austin Business Journal thinks the backed up demand for multi-family housing could outpace the current inventory for at least three years.

So as you can see, the numbers are all lining up in favor of real estate investors, but this is a market to emphasize due diligence and caution. Evaluate what you want out of a property, cash flow versus appreciation, or a healthy mix of both and go from there. If you aren't a seasoned investor, work with a realtor who knows the Austin market and is keeping up with the pace of developments. Things are heating up for Austin area real estate and 2013 is looking like a banner year.